Dole shares rose 0.25 percent yesterday to $12.21, its first positive close this month. Shares of the fruit and vegetable distributor spiked above $14 on Sept. 12 with news that it was in talks to sell two business units , a deal that was announced a few days later. But the stock meandered sideways after that, falling sharply in October along with bearish option activity.
Yesterday's call buyers are looking for the stock to gain more than 7 percent by expiration on Nov. 16, the day many analysts are expecting the company to report third-quarter earnings. The premiums on those options could rise in the event of a rally before then, allowing traders to sell the calls at a profit earlier. If the stock is below the $12.50 strike price at expiration, however, those contracts will expire worthless.
The trades pushed total option volume in Dole to more than double its daily average. Overall calls outnumbered puts by 8 to 1, reflecting the session's bullish bias.
—By CNBC Contributor Mike Yamamoto
Additional News: Dole Food Sells Two Businesses to Itochu for $1.7 Billion
Additional Views: Now Is the Time to Buy Dole: Cramer
Options Trading School:
Mike Yamamoto is an analyst and writer for OptionMonster. Yamamoto has no positions in DOLE.